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Commentary

Illogical Entertainment Consumer Brain: A la Carte TV Is Dead

So much for true a la carte traditional TV cable networks
-- Disney’s ESPN just settled with Verizon over a year long lawsuit. Details haven’t been
disclosed. But we can guess -- in part: Everyone is happy with the results.

In April 2015, Disney’s immediately sued Verizon’s over its new “Custom TV”
package, a traditional pay TV package delivered through Verizon’s FiOS telco system, because it allowed consumers to pick groups of TV networks (though not individual networks).

ESPN wasn’t included in Verizon’s Custom TV basic cable groups package. Disney said its carriage contract with Verizon’s FiOS obligated it to offer ESPN in the most basic
package.

If allowed to proceed, analysts believed Custom TV have would broken a longtime industry-breaking precedent when it comes to distributors allowing consumers to pick and
choose networks for their main, basic cable TV package. That's something that can hurt advertising-supported networks big and small.

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Fran Shammo, CFO of Verizon, had said of Custom
TV: “This is what customers want. They don’t want to pay for 300 channels anymore and only watch 17 on average.”

In February, Verizon said it would sell two package
options -- one of 190 channels and one of 160 channels (with sports). Packages start at $69.99.

All this comes in light of now a growing number OTT services -- competitors to the
traditional pay TV packages -- that can, in part, offer up some “a la carte” network options.

With all these options, why fret about what happens now to
old-style traditional pay TV packages that cost $80 to $120 a month or more? Because all this would really focus on massive disruption to those legacy systems -- from TV content producers/distributors
points of view.

We understand what consumers want: Lower prices for the few channels.

But the business doesn’t operate around that math one that works efficiency for
the well monetized traditional pay TV distribution system. Content owners would profess to explain it isn’t cheaper for consumers to have fewer channels anyway.

Thus, we are
left with this illogical scenario -- wasteful channels coming into our living room is good. For some.